Indonesia launches second stimulus package to attract investment

The Indonesian government on Tuesday unveiled a second batch of stimulus packages to lure investors, prop up weakening rupiah and accelerate GDP growth in the country, an official said here.

The policy focuses on the acceleration and simplification of procedure in business licensing in an industrial economic zone, Economic Chief Minister Darmin Nasution said at the State Palace.

Nasution revealed that the period needed for having a license for business in the zone is cut to three hours from eight days.

Another measure is the incentive provided to exporters which park their export earnings onshore, Finance Minister Bambang Brodjonegoro said.

The minister said that the exporters keeping their U.S. dollars at local banks will have their income tax on interest reduced to 7. 5 percent from 20 percent for one month deposit.

For one year deposit, the tax will be deleted to 0 percent, he said.

The tax on revenue converted into rupiah would be exempted to 0 percent from 20 percent for time deposit of six months, Brodjonegoro said.

The firms investing over 100 billion rupiah (some 6.8 billion U. S. dollars) with more than 100 employees would not need environmental permit and location permit if they invest in growing industrial estate, said Franky Sibarany, head of investment coordinating board.

Indonesia has attempted to cut rate tape, simplifying process of investment licensing, combating graft and conducting other reforms to lure foreign investment.

Rupiah has plunged to the lowest level since 1998 as it was traded at 14,728 on Tuesday, according to the central bank website.

Indonesian economy expanded at the slowest pace in six years at the first and second quarters respectively at 4.71 and 4.67 percent. Endi